Do You Have a Trading Plan for 60 Second Options?
Having a trading plan is important no matter how you trade, but for a 60-second trader, a plan is even more critical. Why? Because there is a lot to think about and deal with when you trade, and when you are trading fast, you have even less time to get it all done. For a beginning trader in particular, it can be easy to forget to take important steps, which can cost you money. Even if you have been trading for years though, a plan can be helpful, because it can keep you on track and oriented. Even veteran traders can make mistakes, and why make mistakes you can avoid? Learn about 5 of them here.
Here are some of the elements which should be included in your 60-second binary option trading plan:
A trading method or system.
This is one of the most important elements in any trading plan. This is a set of rules for entering and exiting binary options trades. It tells you what to look for in terms of indicators or events, and what constitutes a good setup. It also tells you when you should consider closing out early or doubling up or rolling over. It is helpful to have this written down. Again, when you are trading 60-second binary options, things go fast. You want to have your trade rules in front of you so that you can immediately spot any changes that might prompt you to take action during a trade.
Money management rules.
How much of your account will you risk on each of your trades, as a percentage? How will you calculate that percentage?
When will you look at the charts?
As a 60-second trader, even if you are using trade alerts (click here to learn more), you are probably planning on spending a fair amount of time sitting in front of your computer looking for great trading opportunities. It’s tough to manage 60-second trades from a distance. If you do use alerts, odds are you’ll be using auto-trading to help you execute trades, since the opportunity may be gone by the time you get to your computer to manage a trade.
Most traders who work with very short expiry times like this will plan to spend a couple hours a day in front of their computers, looking for entries and actively trading. You will need to figure out the best days and times based on your schedule and the assets you are going to be trading. Make sure to not only plan times to trade, but also time off. You need to take breaks now and again, and you should not be spending all your time 24/7 in front of your monitor. Also in the scheduling arena is the question of how many trades you will be in at a time. Many people can only handle one. As a 60-second trader, you probably can handle several at most.
Assets to trade
You may trade a lot of different assets or only one or two. It is all up to you based on your trading method and your schedule.
A plan may sound a bit like a checklist, and in a sense it is one, but it is a broad checklist, and you also are going to want one for trading in real time. This checklist will include elements like this:
Are my entry criteria all met?
Is the trade located in a sound context?
Am I already in another trade?
Did I correctly calculate my investment amount?
And so on. The idea is that before a trade, during a trade, and after a trade, you have a set of instructions to guide you. That way even in the thick of the action or while you are trying to handle difficult emotions, you can keep on track. You might even have checklist items that help keep you focused. “Am I in the right frame of mind for trading?” might be one question you ask yourself. If you are not, you might defer trading until later. You can also have checklist items for while you are in a trade. One example might be, “Do I have reason to believe that rolling over in this trade will make me more money?” After a trade, you can also have a checklist with questions like, “Did I follow all my trade rules correctly? If not, what did I do wrong?”
Plans to develop self discipline.
As a binary options trader, you are relying on your own self-discipline to keep you profitable. All of these trading plan elements are useless if you don’t pay attention to them, and no checklist in the world will keep you focused without any follow-through. So part of your trading plan should include strategies to hone your own discipline. This is a different process for every person.
For some traders, following a plan can in itself be an exercise for improvement. For others, it may help to make other plans, like deciding to get up by a certain time each day, eat well, or exercise regularly. For traders who have a tendency to overwork themselves, discipline can even mean making time regularly for leisure and socializing. However you choose to approach this, it is key to remember that you cannot succeed at trading unless you are able to develop this aspect of your personality. The good news is that nobody is born with self discipline, but anybody can develop it with enough determination.
Why are you trading?
Answering this question should comprise one last aspect of your trading plan. You need to be in touch with your personal motivations and goals. Some goals are reasonable an realistic, while others are not. Unrealistic goals are not necessarily unachievable, but they are the types of goals which drive reckless trading decisions. A good goal might be, “I intend to become a profitable trader who can achieve repeatable, consistent results over a long time frame,” or “I want to trade 60-second options for a living.”
An unrealistic goal might be, “I want to make $500 an hour trading binary options.” It is not impossible to do, but it promotes foolish decision-making. There is nowhere in the world of binary options where this is more common than with 60-second options, unfortunately. The idea of making a huge amount of money within a one-minute time frame is so tempting that many traders are drawn in by slogans like, “Make $500 an hour,” or, “Make $100 in just one minute!”
This is not what trading is about. If you attempt to set up a profit quota like this, you will make foolish trades out of desperation in order to meet your hourly goal. Instead, why not strive to meet the goal of making regular, repeatable profits? You could also set goals like, “I want to become more disciplined through my trading and become better at following the rules I create for myself.” Do that, and the money will take care of itself. Monetary gain is the inevitable result of making sound trading decisions which lead to profit.
After putting together a trading plan but before jumping in check this out to get a few more tips.
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